barreling down named sandy, but worry more about economic news that seem to be far fromandy. i'm neil cavuto. ahead of the storm, the surge in gdp ain't exactly sunshine. better than expected, weaker than it should be. when you figure government spending accounted for a good chunk, you have to wonder if things are really looking up, not when business investment skids 1.3% in the same quarter and scores of companies were making clear they are not investing much more this quarter. many are wrried about next year battening down the hatches laying off thousands of workers for what could be the perfect economic storm. we're in for nasty weather. to me sis is a francis on just how nasty. what do you think? >> business spending on fixed

expenses, fixed costs down 1.3%. they are not willing to buy buildings, take on higher represent, not buying computers or equment because they don't believe the demand is coming. they are not making any bigger investment. that's what we need to lift the economy is that investme, and the fact it's declining? wow, that's really a bad sign. neil: scott, a better future indicator? what so many ceos are saying i'm preparing for the worst just in case. suspect that a more telling future? >> yeah, look at consumer spending numbers. the positive note is it increased, but guess what? it's down from the first quarter and down from last year so you're right, the businesses look at the dollars from the wallets saying, hey, they are not flying out of there. if you look the the investment numbers, convicting to gdp last year and the year prior, which,

by the way, gdp, 1.7%, below the trend this year, 3% in 2010. the economy's's deaccelerating. neil: adam, do you think of that? >> well, things cod be better. fact of the matter is the economy is growing. it's not growing as much as we'd like it to grow, but it is growing. >> not as fast as before. >> the housing sector's recovering, key, it should recover. it's been down for so long, and the financial system is sound, you know, balance sheets generally good, so we can focus on the negative, or, neil, the positives. >>he real problem is -- >> however many days before the election. neil: adam, i love you dearly, but i don't remember you focusing on the positives with george bush being president, but i'm getting old. >> i don't remember either. >> the economy's 2%, and even if you want to paint it, it would take us eight or nine years to be ck to the employment weather during the highs of the

last administration. to get to 4%, it takes that long to get all theobs back. people can't wait that long. >> if it never moves from this level -- kneeling kneel it's been -- neil: it's been a long time. i mean, we shouldn't -- averaging it out, and if this is the new normal, you know, less than normal, and this as good as it gets, maybe for good awhile as it gets, i can understand why companies sort of, you know, pull their horns in. >> yeah, the new normal, neil, let's celebrate mediocrity. in the uniteted states? neil: care. , i built a college career on that. >> so did i. that gets you through, but i want more of what adam is smoking in california, neil. he's talking about housing

should recover, banks should legend. those are hopey things we can't count on to grow the economy. we need real numbers out there, which as we noted are not there. >> the housing sector is recoveri, not just hoping. there's tremendous head winds. china's slowing, europe's a mess. there's no surprise the united ates is having a hard time growing. we got our own problems. i don't deny any of that -- >> no, but the problem is, though, i mean, this is -- lot of the gwth in this report was on the back of consumer spending. where are tey going to get the money to spend if business pull it in and not hire more people, not spending more on wages, where are consumers going to get money to keep spending? >> again, to be hopeful, let's see what the business leaders say after making progressn the fiscal cliff situation.

we will, no matter who wins the election. i think they may get more optimistic. >> with this congress? neil: i don't want to get into that, and you mentioned consumers, and we'll get into that later in the show, the new tech devices, but gone are the days when it might be single item carrying people into a retail frenzy. >> no, i think consumers spend to a certain extent. i can't jam my son into the jeans he wore last year, he's too big. neil: clothing is over rated. send them commando, save money. >> let's not go there. kids' clothes fall apart or they grow, whatever it. you need confidence to buy a washing machine, a car --

neil: homes, obviously, that's a big ticket item. >> more equity in the homes than a few years ago. >> than a few years ago. bounce off an incredible low, i don't think there's a buying frenzy there in the housing market, but we're seng people come into the market who have been sitting on the sidelines with cash blessed thinking this is the bottom, i have to get in before things go up. it's not a frenzy of upgrading of people who have families and want to live in a bigger house. those folks say wait a little bit longer making sure the job is there. neil: scott, for the president, you have to look at this despite the nuances as good wind to the back; right? he can point to a gdp report better than expected, some growth, not robust, but steady ashe goes. is it too little too late? >> i think it's going to help.

president's number over 3%, and i can't jam myself into old jeans so stocks will do well, but housing all of that stuff, it's in the tank. neil: this gentleman is thin. if he can't jam into the jeans -- i have jeans i got two weeks ago i have to update. help or hurt the president in too little, too late? >> helps him, we're done. up employment is where it is, gdp better than expected, and finishedded reporting essentially on that, now to the elections with generally favorable conditions for the president. >> no, no way. 2% is a horrible number. >> terrible. >> it's almost non-growth. we shouldn't have bounced off this terrible recession that we had. i don't think anyone out there says 2% is a good number. >> i don't disagree, but he'll be able to say better than four years ago, and he'll say that until november 6. neil: we'll see.

guys, thank you, all. 11 days out, and neil cavuto's team all in, live saturday followed by a live your wod sunday november4. we're coming to you at 6:55. i didn't know why it was. networks start movies at 8:05, but we wanted to get in on the action. it's actually before polls ose. we're there before they do, there all night long. the staff wants to know how late is late, neil? four in the morning? i don't need beauty sleep. will be a long night. sandy coming, and remember the special interests blasting? the fundraiser for the republicans here to blast back at him. he's taking lots of money from the very vokes he was blasting. a possible billion dollartorm

bearing on a lot of swing states and how sandy could pull a doozy election. maybe that's the october surprise. bob... oh, hey alex. just picking up some, brochures, posters

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>> millions of americans struggling to get by, and voices shouldn't be drown out by millions of dollars in secret adrtising. as the election approaches, it's not just a theory. we can see how druttive to the democracy this becomes. damaging the democracy. those in washington a long time are not always happy with me. they talk about me like a dog. neil: he's been barking about this special interest cash for a long time, but also taking a big bite out of it. we learned the obama campaign raisedded a billion dollars. wow. that does not include $64 # million from the very outside groups the president likes to smack around.

the romney camp raised plenty from the same guys, but the fund jz raising specialistsay mitt romney doesn't bash them. that's true. what do you think of this? >> it's a branding problem. i think that, unfortunately, the democratic party, the obama administration campaign has trapped the g.o.p. and mitt romney into a box by saying we are the party that defends the 1%, and in return, we're trying to, you know, keep the tax rates low and no tax hikes so that makeus, in a weird way, backed into a corner defending the 1 #%. that makes us look like we defend the special interests. neil: if that's the case, and, i mean, i know you argue it's not true, come back at say, well, why are you taking money from the same group that is last time we checked the 1%. >> it's the obama spin. a lot of teem -- a lot of people are not like you into the news. everybody catches glimpses, short 30-second 1-minute adds,

and they think that obama -- neil: they can see pot meet kettle; right? they can see hi hypocrisy; righ? >> they can. i think this happened with libya. they are seeing, wow, you are not here to protect this. the policies really do not work. i don't think the people are neil: interesting to me, and i don't cast on anyone, but if you make it a point and call the other guy a bs in "rolling stopes," make your you're not. be that as a may, a lot of money in the race. do you think mitt romney will be the billion dollar man? >> oh, absolutely. neil: where is the money going? >> on ads. i'll tell you right now, i did a conference call up at the hoover institute meeting, and i went out the back for a conference call fast with one of the donors in texas that gave to a super pac last minute saying if i give this money, will my ads run

immediately? neil: planning a last week blitz of advertising, and by then it's too late? >> push it on to the edge. neil: every day. >> up to election day. it never to late. the minute you think it's over, or in the bag, either way -- neil: riddle me this. why does it seem to me when i travel around the country and look in the swing states and look at ads that i see far more obama ads, not as many romney ads. am i imagining that? >> maybe you're not, i don't know. neil: begs the next question. itz creek. you got the ads, the money, blitz creek. what's the harm in just so many people get sick of the ads. >> well, i mean, you also run a chance of people being turned off. you do twitter, facebook, so many mentions, so many tweeting, you look at it and say tas over kill. i'm not going to look at the

message because you're driving me crazy. i don't care what you have to say. neil: if the other guy is doing that, don't you want to get in on the crazy overdrive. >> let him do it. look, i mean, -- neil: wheres that's going to happen though, end the campaign with maybe both guys, more likely your guy leaving money on the table. >> not going to leave money on the table, no way. neil: i guarantee you there's money left over. they shouldn't, but they will. >> give bonuses to the hard working people -- neil: they can do that? >> you can give a, when it's finished, you can pay people bonuses, thanks for working. they are paid -- neil: if you're $100 million, can you give them $50 million? >> that looks horrible if they came out. giving somebody $50 million? no. neil: all right. spend like crazy, a blitz creek?

>> spend like crazy number one. number two, we're going to get a blitz, push, push, push. neil: your prediction? >> i think romney pulls it out. a landslide, i disagree, no disrespect. neil: he changes every day. >> it's going to squeak all the way to the end. we could have the bad deal between gore and bush. some things, so many voter fraud, a lot of things going on. it's close, and it's neck-and-neck. neilwhen it's close, you question every single vote; right? >> yeah. neil: thank you, go seeing you. >> uh-huh. neil: over the fiscal cliff, jobs, and it's already happening, my friends. gecko (clearing throat) thank you, mr. speaker, uh, members of congress.

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neil: another day, another ssive round of layoffs. announced thcutting to 2,000 workers, part of the slew of companies announcing layoffs staring down the fiscal cliff you might have heard about. the next guest preparing to lay off workers, freeze salaries, negotiate health care benefits. the whole nine yards. president and ceo, michael kelly with me now. what do you fear the most? like, i ask a lot of your colleagues this about what makes the guy like you retrench? what? >> well, we retrenched -- as a matter of fact we've been throrough the reduction divorce, the expense control, through management salary cuts and the health benefit regotiationsn preparation for the cut. they were clely evident 12

months ago they were coming for a company like our size. neil: seems reason to get ahead of the curve to clamp down, how much of it was just the world economy? how much of it was fear of watching just sitting and not getting anything done, maybe blowing the fcal cliff thing? break it down. what broke into you saying, you know what? here's what i'm going to do. >> what we were really responding to, sub contracting the big defense companies, and most is defense relatedded saying, hey, thi is what we're doing. we can't be as open because therare larger companies that can't move as quick, but a smaller company that's pretty much one location, one set of business criteria, we just made the choice to a quickly and to get ourselves into the position where we could recover once things get going in the right

direction. neil: a lot embracing for the sequestering cutting that will take a lot out of defense spending, and, in fact, warnings have gone out to them and to their workers, you know, prearm for tough times. what if they miraculously make a deal, make, avoid automatic cuts, delay them, whatever. is everything back on? is your business back on? are the cuts that you made unnecessary? do you bring people back? open up other factories? what do you do? >> well, no, i don't think -- the industry doesn't move fast. the defense industry moves slow, slower than a normal business sector so i would say that we wouldn't be hiring people back. we made those changes to line ourselves with that the next 12 month, and even if congress gets back together and avoids this, the impact is already there. neil: interesting. now, would the impact also be

there, mike, whether it's president obama for another four years or president-ele romney? does it make a difference? >> i don't think at this ti it does. i would like a pro-manufacturing president in office versus what we have today neil: you think mitt romney is more that than the president? >> well, presidents -- the number one goal should be to protect and number two to lead. i've seen no leadership from the president on this issue. neil: wow. >> so i would say that a pro-manufacturing president as romney would have a great effect, but it's going to be medium term. i think a lot of the things that occurred up to date are going to happen in 2013, and there's not much avoiding that. i mean, neil, the one thing, we created this problem, and we've lost so much opportunity in the market. we created the problem. we knew at we were getting ourselves into; right? i call it the perfect storm. there's a big storm heading your way, but there's a storm hitting

american manufacturing for 12 months, and it's been defense cuts and tax hikes. we let it happen. we have not come up with a plan to solve it, and the president should be leading on the issue. there's a lot of middle class that work in manufacturing, and it's really sad to see we're at this point looking down the darrelof a double barrel shotgun, the perfect storm that's going to hurt middle class people. neil: wow. hopefully we can avoid it. mi, thank yovery much. very good having you. >> god bless, neil. neil: fox business alert. hurricane sandy causing two swing states declaring states of emergency. beware, the october spriz, -- october surprise, yeah, this one, is about to blow through. [ male announcer ] with over 50 delicious choices

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neil: we just may have found the object surprise. sandy, the storm that could potentially shut down the most popular region of the country affecting one out of five ericans. forget about threatening hallown. say it comes down t a l of folks seeing their power go out. does it have the potential of shaking up the vote because many will not be able to vote? this is among one of the things rich edson is talking about. both campaigns are gram ling over. what do you think of this, rich? >> you know, neil, it's a good point, especially when you consider where the storm cld go. one of the projections, four to eight i'ms of snow in ohio. remember that halloween storm in the new york area, shut the place down? imagine trying to get around a week lat and vote in the sagging power lines, and so ohio is the state where this could

make a difference and pennsylvania. you get a lot of snow on major cities or just problems getting around in major cities suppressing mocratic votes, public transportation is an, and take public transportation, and so even when you talk generally about turnout, neil, this is app election that democrats say if they can get better turnout, they can turn votes out, they can compete, be better off in this election. if you got a weather event and power event lasting for a week, that could be a problem. neil: they used to say about ronald reagan voters, rich, before you were born, young man, they would go to the polls through broken glass t vote for him. i'm not sure the same could be said for mitt romney or president obama. in an event like this where a number of states could be looking very, very tough weather

conditions that would make it difficult to get to the polls, whose voters are more jaed to ensure they do? >> the biggest enthusiasm gap we've seen is one from 2008 for president obama compared to that now for president obama. the economy's not doing well, voters reagent to that, and so you're beginning to see roars -- reports of the republican enthuse yam. when i was in school, teachers used to tell us you got to pray, cross your fingers for rain so all the elderly folks don't vote against the school budget because they don't have kids in the school anymore. neil: on the noti, it's a given -- being political correct here, the stor could benefit romney more than the president. we'll see how it goes. i see the logic to it.

what do people do in states who can't vote. extend voting hours? is this a vote extending into november 7th? it's mess ri; right? >> it could get messy. it would be a state-by-state thing, governments could try tt get meeting locations to bring people to the polls, expensive on the state level, and, you know, look at the states -- would ohio try to do that from a government level because it's a key state? is there sense in doing that? where the bulk of the storm, benefits the president, and the bulk of the storm hits states he wins, w jersey, maryland, delaware, all in the column, no issues there. neil: that's true. let's talk about then, affords a chance for the president -- hope no one seeings harm as a result of the storm, but storms are for republican or democratic president to show leadership, go to areas affected, to be the leader. there's only one president, and

when you go t an effected area, that helps you in the sense, does it not? >> absolutely. casein point, the presidency of george w. bush, 2004, b before e debates, seen as a problem for the president to deal with the storm in florida, and that he was not preparefor the first debate with senator kerry; however, image-wise, he was getting his hands dirty, a good pr move for the white house at the time. a year in change, hurricane that treen that, not good for president bush at the time. depends on what the reaction of the federal government is, how bad the storm is, and what on the ticks you get from the white house and president obamachurns out in response of this. neil: who thought the october surprise would be a nor'easter or whatever. >> and named sandy. neil: right. rich edson, thank you very much. good having you on. >> thanks. neil: microsoft entering the tablet ring, and apple could get

its bell rung because of the economy. the former microsoft big wig on how companies could be down for the count, after this. from currency trading for a few

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caution, in a conservative company when it comes to handling estimates and quarterly earnings statements and the like, but they spend tim talking about head winds. they must see something. what do you think? >> well, i think the ione5 has been out for awhile. the mini is an interesting product. it's not a block buster. on the oer hand, there's the windows 8 products, the tablet, the pc running win does 8, and you got a lot of technology enthusists itching to get hands op these things. you have samsung with the galaxy s3. you got folks over at amazon doing exciting things so ts is a great time. neil: they all can't make money on it; right? i mean, just going to be for the technology sphere or hanging too

much, and are we saying, all right, well, there's no way they can do it. there's an economic poll. the fcal cliff, people are not going to be as confident and rebust about buying stuff, and the tech guys prove us wrong. >> well, you don't know, neil. we can sit here and postulate what the futures are, but one thing we know for certain is you can hardly find a more exciting time relative to the technology tools so that's nothing but good news. take the typical window users focusing more on business than social networks. now they can use nose spread @%eets and word documents on their tablet as well as their pc with the smart phones coming along, running windows 8 operating system. hey, that's exciting. neil: just because you're a former microsoft guy, that has

nothing to do with the comments you just made. >> oh, absolutely not. neil: i'm kidding you. the reason why i think there's going to be more bang for the microsoft buck than people are appreciating is much like people have been sitting on old cars because it's the cost to switch out, they almost havv to. the average clunker on the road is eight and a half years old. they have to make a sit. the same is said of people with old operating systems on the computers, and window incarnations are copies of the one prior so there's been no reason to switch, but now there's a compelling reason and almost a need to switch. given way to a bit more necessity where you have to change, and that -- that might be something we've not factored in that could favor more buying as we've seen in the auto arena we could see in the technology arena. what do you think? >> i agree totally.

neil: you should run the other way. i literally made that up. no, i do think that. the question is how much we'll see of that. >> exactly right, yep. i think it somewhat depends on the topics you talked about earlier in the program is that if the u.s. government and washington, d.c. connues to fumble around and makes this is serious economic threat as we go into the so-called fiscal cliff and scares people to death, that will be a wet blanket on what's going on, not just with technology, but in general so there's huge risks out ther neil. on the other hand, the technology's very exciting. neil: i looked at all the premier technology names of the day, microsoft, apple, and dell, and big premier names started in absolutely awful economic environments. i mean, microsoft in the

mid-70s, and same is said of dell, of apple, and yet they grew and thrived to be the giants they are of varying degrees today. >> yep. neil: what do you think is going on under the surface that guys like me in the media miss that as we are pooing the general economy and technology, what a we missing? >> well, you know, my many decades of working with proctor and gamble prior to microsoft give me a clear answer to what you put on the table, namely, if you put a product in front of someone that's truly excited, clear benefits, easy to use, they know how to use it, let me tell you, you do create excitement. that's what the free enterprise systems about here in america, and the best products win, and right now, w got some exciting ones on that table. neil: so guys like you and roar, you know, visionaries, and would throw you certainly in

that camp. you don't necessarily overly focus on things ike a fiscal cliff or europe going to hell in a handbasket. you're aware of that, but if you're aware of the products you are offing, you just go through that? >> absolutely. the product what's key. you got to create things that are useful, exciting, clearly fit in someone's life, can make it easier, can make it fun. if you can score on those dimensions, you have a winner no matter what's going on around yo neil: all right. well put. bob, you've been kind enough to stick around with us. we love having you. more of bob herbold, a great thinker of today, where we go, particularly with china considered the new detroit. jeep cld be kicking into high gear moving overseas on why the u.s. could be driving them out.

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neil: all right. jumping ship on america? the company is considering shifting gears and it's a protection plan moving a lot of manufacturing out of michigan and read its china. former microsoft ceo back with us on what he makes of this. i don't think in the middle of a bailouhere that we ever envisioned that part of what we might be getting is a company skipping over to china, but what do you make of that? >> in the company that has to look at the situation in terms of work to produce things and make decisions based upon efficiency and effectiveness. in the case of the jeep it's a

hot product in china right now. they love the product. selling extremely well. some moving some of the production or maybe even all the production of the product over to china could make a lot of sense from the standpoint of wages, from the standpoint of availability of engineers. thirdly, it's quite possible, and i have heard the what is beg considered here is a relationship with the automotive company. a tax-free zone in china which means they can -- chrysler could set up shop. basically be part of that tax-free area, and so that third advantage is a big tax advantage. neil: but think about what your saying. all makes perfect business sense, but the president in all of these debates with mitt romney has been saying you want to ship thes jobs of the china. here we have bailed out of the company's who we were told, you

get this money, save american jobs. we literally are, afer all of that, shipping those jobs to china. maybe the right and apparent big macro reasons, but to belittle mitt romney and to say that that is what you're all about, this isn't about casting aspersions on democrats or republicans. if it was a potential i think people would have said, no way in hell. that's what's happening. >> it's a classic example. with all due respect, president obama i obviously doesn't understand how our multinational company works. there is a board of directors, exutes. they are responsible to shareholders to make wise decisions on how to run th operatiin. in fact, if there is a cheaper opportunity, a more effective opportunity, they are legally bound to make that decision and to execute it. it is not an issue of letting

america or like in china or whever. neil: i think you are dead on the money. this is green. all about making money. and i can see it fully for that. now the question is, the problem -- switch to the potical aspect i can understand why polls in michigan and ohio and states that have benefited enormously from that bailout are so tight. even those whose jobs were saved in the bailout are starting to get antsy. and you would think certainly in michigan the president would be sitting on a 20-point lead. that state, as coming in to talk to you, dead even. >> you know, if china were running this country what they would do is see detroit in a problem situation. you kow what they would do? make detroit a tax-free zone. let me tell you. the other 49 states would come running to michigan in detroit. that is what china does. so there's it's a tax-free zone

in china. neil: a big player. the chinese did it on the basic essence of capitalism, and we don't. >> absolutely. absolutely. neil: all right. now what? may have this trend could pick obscene invariably we are drawn to china and the opportunities for companies there and making money there. mitt romney has taken a tougher stance on china. invariably i does deal of difference in their policy, but what d.c. changing anything in all? >> i think you would see more pressure on china to continue to open up the currency issue which is probably the right thing to

do. that woud be welcome. worldwide. china pay more attention to that. they have improved, but they have a long way to go. thirdly, i think you see an administration that, in fact, understands basibusiness concepts which the majority of washington d.c. does not right now. thus our comments earlier, but the fact is we need a group of politicians that want to realize that they are in competition with other countries in terms of jobs. they have to get out there and compete. you don't sit there and dream up more regulation and taxes for these companies. you work with them, like this was government does, like the singapore government does, like the chinese government does that come up with ways to help those companies do business. that's how you create jobs. neil: you know, just a personal

reaction when i see the demeanor and the approach on the campaign trail the president takes, i don't think he likes businessmen. i don't mean to say that he hates the mall. i just don't think in is that this really he really likes business, doesn't trust business. i think it comes out in his rhetoric aut fat cats, they ought to pay their fair share, leaving aside that that top couule of percent pay the lion's she of taxes anyway. 47 percent aren't paying any income tax. invariably he -- it is his language that i think most ticks of certainly was true guys i talked to which is to be expected, but increasingly many of your corporate colleagues here just say, enough is enough. this isilling us. >> i agree. kneele, each of us is a victim of our circumstances and will we have been through in life. there are a lot of people in washington d.c. that have real -- no real familiarity with what is this is all about.

in my case i have been all about business, which means i probably do not understand scial workers the where should. so we are all of victim of our experiences, but the fact is we have to ruthis country by havingng individuals be successl , which means they have a job, a successful family because they can find the family not enough attention is being paid to those basic economic principles tht will enable our families to be successful. neil: he saad that brilliantly. i am very glad we had a little more time with you. always richly worth it. thank you, my friend. the well. >> take care. neil: all right. to bob's basic point about the losses and how they're feeling, why how they are feeling it matters a lot more than how you are feeling because a lot of them are not feeling well. them are not feeling well. that could be bob...

oh, hey alex. just picking up some, brochures, posters cops of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair loo gat. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

♪ neil: your boss is bombs, maybe you should be to because if i said it wants us said it a whole lot of times. be nervous when your boss as nervous because when your boss is it is likely because his job is in peril and when his job is in peril, yours could be too. cutting costs to prove he can survive, which is why in times like these when companies are telling is that their revenues are not growing, that they are gung-ho on cost-cutting, the

latest to say he is laying off arly 2,000 workers. at least a half-dozen other companies. more than 10,000 job cuts this week. more to come, which makes me wonder about the improving consumer confidence numbers. by not saying more, just that so many of us should not. not that our boss is getting fidgety and may be looking our way to pull the trigger. keep in mind, when your boss is nc and he has to answer to a board that says you're not growing profit, not going the business, how are you going to improve? so next time you go into work and look in the corner office get out. get out. that will do it here. good night. ♪